Tyson's bid was $63 per share -- amounting to a total of around $8.6 billion -- beating rival Pilgrim's Pride's (PPC) $55 ($6.8 billion). That price was miles higher than the $37 or so Hillshire was trading at before Tyson and Pilgrim's Pride started wrestling over it.

It's a high price to pay for a collection of munchies. Hillshire Farms is a fine company, but salami and sausage aren't typically known as high-margin products. Let's look at the possible reasons that Tyson is ponying up so much for its fellow foodie.

Bacon Boom

It's good to be in the meat business just now. Americans like to eat, and they like their proteins. Take bacon, for example. Once upon a time a fairly low-key breakfast staple, then demonized as an unhealthy, disease-inducing food, it's been experiencing a comeback lately. Sales have increased in each of the past four years, culminating in a record high of almost $4 billion in 2013, a 9.5 percent year-over-year increase.

It's not only the salty strips that consumers are hungering after. Sales of other fresh meat products and meat snacks both grew by double-digit percentages last year.

So it's no wonder that some players in the industry want a bigger part of this action. This came sharply into focus about a year ago when China-based pork producer Shuanghui International Holdings (now known as WH Group) agreed to fork over $4.7 billion to grab fellow pig products specialist Smithfield Foods.

It's still early, but the buy looks like a big win for the Asian company. In its first quarter of the year, Smithfield's net income rocketed nearly six times higher on a year-over-year basis, rising to over $105 million from the first quarter of 2013's $18 million. At least some of this gain could be attributed to Smithfield's key product, fresh pork, sales of which advanced by 17 percent over that time frame.

Buying Extra Lunch Meat

Prior to the Tyson-Pilgrim's Pride bidding war, Hillshire was hard-to-resist cheap, trading at a price/earnings ratio of around 20. That's a relative bargain for a company that grew its adjusted per-share income by 28 percent in its most recent quarter.

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Hillshire itself has demonstrated a robust appetite for acquisitions in recent times. This past April it reached an agreement to buy Van's Natural Foods, a purveyor of clean-ingredient carbohydrate goods, including waffles and multigrain snack chips, for $165 million.

The following month, Hillshire signed a definitive agreement to take over Pinnacle Foods (PF), owner of a host of well-known packaged food brands like Birds Eye, Swanson TV dinners and Vlasic pickles. The price was $6.6 billion.

Pinnacle might very well bounce back into play. Tyson's winning bid for Hillshire is contingent upon the latter dropping the Pinnacle offer. That would trigger a breakup fee of at least $163 million, to be paid to the one-time acquisition target.

A Big Grocery Bill

This consolidation trend went in an expensive direction quickly. The $8.6 billion Tyson's pledged to buy Hillshire is nearly 20 times its cash position of $438 million as of the end of this past March. It's also over four times the $1.9 billion in long-term debt Tyson had on its balance sheet at that time.

If share price movements are any indication, investors in the food sector are concerned about the hefty price tag. Tyson's stock dipped by $1 or so per share, to just over $36, on the first trading day after the Hillshire auction results were announced. In turn, Hillshire stock saw a similar price dip when it unveiled its Pinnacle Foods deal.

But none of this will likely deter companies from sniffing out acquisitions. Just the fact that Tyson is willing to cough up much more money than currently in its possession for Hillshire indicates that the hunger for good assets is acute.

And let's not forget that Pinnacle will likely soon escape the grip of the recent Hillshire buyout attempt. We shouldn't be shocked if that triggers another bidding war for control, leading to further consolidation of the industry into fewer -- and bigger -- hands.

Motley Fool contributor Eric Volkman has no position in any stocks mentioned. Nor does The Motley Fool. Try any of our newsletter services free for 30 days.

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catbell7

I purchase the already cooked real bacon pieces -- no messing up my stove and in an omlette with sharp cheddar cheese and those bits and even frozen spinach- yum yum no need for toast just some generic salsa (good on salad too). I also keep Wendy's chili -- a small one into 4 services is great on an omlette or a green salads.